Governments and development agencies spend large resources building property and company registries to protect property rights. When these efforts succeed, owners feel safer and are encouraged to invest in their property, and banks are able to use it as collateral for credit. Similarly, firms prosper when entrepreneurs transform their firms into legal entities and can thus contract more safely. Unfortunately, developing registries is harder than it may seem to observers, especially in developed countries, where registries are often taken for granted. As a result, policies in this area mostly disappoint.

Benito Arruñada aims to avoid such failures by deepening our understanding of both the value of registries and the organizational requirements for constructing them. Presenting a theory of how registries strengthen property rights and reduce transaction costs, he analyzes the major tradeoffs and proposes principles for successfully building registries in countries at different stages of development. Arruñada focuses on land and company registries, explaining the difficulties they face, including current challenges like the subprime mortgage crisis in the USA and the dubious efforts made in developing countries toward universal land titling. Broadening the account, he extends his analytical framework to other registries, including intellectual property and organized exchanges for financial derivatives. With its nuanced presentation of the theoretical and practical implications, Institutional Foundations of Impersonal Exchange significantly expands our understanding of how public registries facilitate economic growth.

“This is law and economics at its best. Benito Arruñada’s brilliant book greatly advances our understanding of how law and legal institutions affect the possibilities for trade. Very unusually, it also demonstrates how the needs of transacting parties and the interests of those who serve them profoundly shape a wide range of institutions from contract enforcement to title registries”—Henry E. Smith, Harvard Law School

“With Institutional Foundations of Impersonal Exchange, Benito Arruñada fills an important gap in the literature on institutions and economic growth. He recognizes the importance of impersonal exchange for growth, but also understands there are trade-offs in developing the institutional framework for such exchange. This book is a “must read” for anyone who wants to understand the full range of rules governing property rights protection, enforcement, and exchange.”—P.J. Hill, Wheaton College

“Benito Arruñada has produced a masterly analysis informed by sound economic and legal theory. It deals with a very real-world problem: the issue of how best to provide security to participants in transactions in impersonal contexts. His focus on impersonality clarifies the fundamentals of a long-running debate in the world of development over the priority to be given to formalization of land rights. Registration, his analysis suggests, is properly seen as a response to the needs of impersonal markets in land, not a magic wand for creating them.”—John W. Bruce, Land and Development Solutions International, Inc.

The University of Chicago Presswww.press.uchicago.eduISBN-13: 978-0-226-02835-4ISBN-10: 0-226-02835-6